Absence of P

Published: Tuesday, June 24, 2008, 18:33 [IST]

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New Delhi, Jun 24 (UNI) Expressing concern over the government's procrastination on approving Phosphatic and Potassic (P&K) fertiliser policy for Kharif 2008, major manufacturers and importers said the absence of the policy is jeopardising the domestic production and imports of fertilisers, ultimately causing its shortages in the country.

Fertiliser Association of India (FAI), with major manufacturers and importers as its members, held an emergent meeting here last evening expressing concern over the absence of the policy which lays down cost of raw material and the finished product.

The prevailing uncertainty has damaged the liquidity position of the companies making for them to continue with production and import of this variety of fertilisers. Outstanding subsidy due to the P&K industry and importers by March 31 this year was estimated at about Rs 8,000 to Rs 10,000 crore, including escalation in costs yet to be notified by the Government.

In addition, the payment of subsidy or concession for the first quarter is estimated at Rs 20,000 crore. Thus, the total outstanding payment upto June 30 due from Government is about Rs 28,000-30,000 crore.

The FAI pointed out that international prices of raw materials and finished fertilisers were steeply rising and the MRP, at which fertilisers are sold to farmers, had remained unchanged except in the case of NPK complex fertilisers where it has been reduced.

Thus, the subsidy bill of the Government is increasing.

However, the budget allocation for 2008-09 for fertiliser subsidy or concession of Rs 30,986 crore is grossly inadequate which needs to be substantially enhanced in the first Supplementary during Monsoon Session of the Parliament.

At the same point, the FAI said the bonds which are given to the industry in lieu of part payment of subsidy or concession were presently being discounted at 11 per cent which was making difficult for the industry to absorb this loss.

The realisation by the industry through MRP from the farmers is only 15 to 18 per cent of the total delivered cost of P&K fertilisers and the balance of about 82 to 85 per cent is to be recovered from the Government. As in the case of DAP, the current delivered cost varies between Rs 55,000 and Rs 60,000 per MT while the companies are supposed to sell DAP at a maximum price of Rs 9350 per MT, representing only 15 to 17 per cent of the delivered cost.

The P&K industry is heavily dependent on import of phosphoric acid and sulphur and sulphuric acid for production of phosphatic fertilisers. But, restrictions on the export of these products accentuate their non-availability.